I last wrote about this one after their half year results when despite good numbers they cautioned about tougher comparatives for the second half. They have been investing for the future and I gave them the benefit of the doubt as I felt some market volatility might help to off set these concerns,
Today we have had an initial update from them on this covering the period from 1st December 2013 to 17th March 2014. In this they had some encouraging news when they stated:
"Revenue in the third quarter was £96.7 million, 9% ahead of the same period in the prior year. The year-on-year uplift was most marked in an unseasonably strong December, although conditions were reasonably supportive throughout the quarter as the financial markets responded to several catalysts, including the clarity around tapering in the US and weaker than anticipated Chinese economic data."
They continue to emphasise more active / profitable client generally which meant an 11% decline in active clients in the UK for example, but revenues per client here were nevertheless up by 24% as a result of these actions. Australia and Europe also saw good growth and it was only in the Rest of the World mostly Singapore and Japan where they saw weaker numbers due to slower foreign exchange trading.
On the outlook they say, assuming market conditions remain similar, then they expect revenues to be up for the year and their costs are expected to be lower as staff recruitment has taken longer than expected and the FSCS levy is going to be £2 million lower. So all in all a positive update which seems to leave them on track for a small increase in profits in what is a transitional year as they invest into improved IT and to expand the business into related areas like stock broking. The shares are up a little since I last wrote in January (and so far today) in a market that is slightly down. Of course a quiet end to the year for them could still throw up a short term disappointment and a buying opportunity, however with the outlook being a bit clearer and slightly more positive, I am still happy to hold on given the near 4% yield for this year.